Cold War 2.0

Geopolitics over the past few centuries has been the sum total of patterns which keep repeating from time to time. These patterns reveal themselves as trade expeditions to colonial conquests to trade wars of the 19th and 20th century to the era of globalization after. In our earlier piece, America First we accurately forecasted how the Donald Trump presidency in America will fuel the rise of nationalist populism across Europe and parts of Asia. This economic nationalism in response to globalization has revived the fears of Trade Wars marking the beginning of the end of Free Trade Agreements (FTAs). The turmoil in global economy and geopolitics over the last few years also saw Dr Henry Kissinger quip in a recent interview, “I think Trump may be one of those figures in history who appears from time to time to mark the end of an era and to force it to give up its old pretences. It doesn’t necessarily mean that he knows this, or that he is considering any great alternative. It could just be an accident”. It’s time to make sense of the challenges the global order is facing and how it is likely to be shaped by the above events in the months and years ahead.

The western world will have to recalibrate its strategy with Russia and understand that Vladimir Putin tends to eulogize the idea of Mother Russia taking its path to old glory.

After decades of globalization, the global order is finally witnessing its slow withering as the Trade War between the two largest global economies; the US and China heats with threats and counter threats of imposing Trade tariffs on each other. As we discussed in our earlier piece Trade Wars are mutually destructive and the pain is now being slowly felt on both sides of the Pacific with China suffering from sluggish economic growth and mounting bad loans while the US is being forced to bail out its soybean farmers worth $12 billion and its corporates asking for a halt on tariffs that are hurting their business.

China is sending a delegation to Washington to find a solution to the Trade War after further tariffs worth $16 billion went into effect on 23rd August 2018 taking the total imposed thus far to $50 billion. The United States foreign policy establishment has finally woken up to the fact that China essentially aims to supplant America as the sole global superpower (unlike the conventional neo-con viewpoint of Russia being enemy no.1)raising alarm bells in Washington DC. The latest Pentagon report on China’s military capabilities submitted to US Congress clearly underscores that the Chinese military is planning target runs on US targets and strategically aiming to build capacities with latest technology acquisitions. This reality has made US policy makers and Trump administration declare China as a strategic competitor with sanctions on its entities and restrictions on its companies like ZTE etc.

Cold War 2.0 will again be between two contrasting ideologies and economic systems; on one side the free world, IMF model and democratic ideology championed by the US while on the other side authoritarian rule and neo-colonial debt trap diplomacy by China in the form of OBOR/BRI.

US Congress has thus passed NDAA 2018 Bill incorporating laws to deepen engagement with Taiwan and promote Asian Quadrilateral cooperation between India, Japan, and Australia in the Indo-Pacific region. The signing of Foundational Agreements between India and US and the new Quad effort to counter BRI by funding infrastructure projects in Asia and Africa has only accelerated the great power competition between US and China which is Cold War 2.0. This is Washington Consensus vs Beijing Consensus which we had explained and foreseen in our 2016 book “The New Global Order”. Cold War 2.0 will again be between two contrasting ideologies and economic systems; on one side the free world, IMF model and democratic ideology championed by the US while on the other side authoritarian rule and neo-colonial debt trap diplomacy by China in the form of OBOR/BRI. The slow evolution of bipolarity will be the primary result of the current Trade War as countries in Indo-Pacific will soon have to make a choice on what side they want to be and considering China’s legendary history in honouring its promises most democracies here like India, Japan, Australia and Indonesia will make a beeline to Washington DC and find a negotiated settlement on trade and other issues.

Russia and USA are enemies in peace and brothers in arms in war!

Bipolarity between US and China leading to Cold War 2.0 will also have global ramifications from Russia to Europe to the Middle East. The joker in the pack here would be Russia who has currently fallen out with the west but sooner rather than later USA and Europe would have to realise that a rising China can’t be countered without Russia’s help leading to a role reversal of 1971 when the US sought a détente with China to counter the Soviet Union. Henry Kissinger, the architect of 1972 Shanghai Communiqué has been one of the proponents of the Trump Administration mending ties with Russia on issues of strategic importance like China, Syria and Ukraine. If this sounds farfetched, let’s take a moment to remember that Russia and USA fought both world wars on the same side. They are enemies in peace and brothers in arms in war!

The western world will thus have to recalibrate its strategy with Russia and understand that Vladimir Putin tends to eulogize the idea of Mother Russia taking its path to old glory as one of the Russian writers in 19th Century Fyodor Dostoyevsky’s wrote about the Russian soul. Dostoyevsky believed that Russia’s path to old glory lay in a Pan-Slavic Christian empire with Mother Russia being the centre of that holy empire. He believed that all erstwhile Slavic territories will one day return back to mother’s nest i.e. Russia. His thoughts are also in sync with Ivan Ilyin, a Russian religious and political philosopher who espoused Russian Christian fascism. President Putin has made reading of Ilyin’s works mandatory for Russian politicos. Hence when Vladimir Putin speaks of ‘Brother in Arms’ about Ukraine, Crimea or Georgia, he espouses the thought of an order contrary to the Westphalian model of Europe and US. Russia recently dumped 85% of its US Treasuries hitting back at US sanctions. It is both playing hardball to achieve its objectives along with giving spectre to slow but steady Dedollarization of global finance and trade with Euro, Yuan and other currencies in bilateral trade. This is another reality the West will have to come to terms which we had clearly stated in Eurasia in “The New Global Order”.

US’s NATO allies in Europe have been caught in the crosshairs of the spat between Russia and US on Crimea, Syria and Russian meddling in the US Polls 2016. European Union has been grappling with a series of crisis from Ukraine, Brexit to Iran Nuclear Deal withdrawal by the US and resultant re-imposition of sanctions on Iran. The imposition of trade tariffs by the US on EU has made countries like Germany openly squirm at Trump’s view of “Free Trade and Global Rules based Order” virtually signalling that Germany is open to the idea of establishing its alternative to SWIFT to bypass US sanctions on Iran. This is, however, easier said than done as France (who is an equal partner with Germany in EU) has been more flexible in terms of trade tariff discussions with the US with its Oil giant Total withdrawing from projects in Iran. French President Emmanuel Macron has taken his country towards resurgence with a slew of domestic reforms from education, mandatory military service to cracking down on terror cells. Internationally, he has deepened France’s engagement with the US, nations in Africa, and sending sails across the South China Sea and signing Logistics Military agreement with India with an eye on Indo-Pacific. France’s resurgence is in stark contrast with Germany whose leader Angela Merkel is despised in Eastern European countries; facing domestic backlash over the refugee influx and US opposition to its projects with Russia like NORD STREAM 2. With the UK on sidelines and France charting its own course, Germany is embroiled in reforming Eurozone and America’s criticism of Germany’s contrarian views creates a fragmented Europe to Putin’s delight who is playing on these Faultlines within EU by backing NATO allies like Turkey.

The rise of transnational ideologies like Ottoman Turkey and its alignment with Pakistan and China is likely to create trouble for India in the Indian Ocean Region.

Turkey as we predicted in Turkish Coup and our book, “The New Global Order” is on the verge of breaking off from NATO after the latest round of sanctions were imposed by the US in view of the arrest of an evangelist pastor in Turkey. Turkey alleged that the pastor was a part of the Gulenist network aiming to undermine President Erdogan’s rule. President Erdogan dreams of recreating Turkey’s Ottoman glory of the bygone era. The Turkish crisis is an opportunity: for Russia to break NATO and for China to tacitly back Turkey’s financial stability aiming to pluck the 2nd largest NATO power to join its axis of China-Pakistan-Turkey (CTP) with other allies being North Korea and Iran. As things currently enfold Turkey is about to flip with its deepening engagement with Russia, Iran and China from military deals to economy to nuclear power plants. The rise of transnational ideologies like Ottoman Turkey and its alignment with Pakistan and China is likely to create trouble for India in the Indian Ocean Region. Thus the role of a rising India becomes even more important as it is the only nuclear power in Indo-Pacific capable of taking on the Chinese might and the CPT axis in South Asia via an alliance of democracies.

The great power competition between the US led alliance of democracies and China led Axis Bloc (CPT+DPRK) will have huge ramification on various regions globally from the Middle East, Central Asia to Africa.

India will play a pivotal role in shaping the future of the global order. For this, it will be forced to shed its pacifist NAM mindset with the fast emergence of bipolarity. India already in the top 7 global economies and top 5 global militaries will have to step up its profile as a global player by having a say in decision making at international levels where non-alignment won’t serve its global power ambitions. India would have to deftly balance China and Russia, Russia and the US using a multi-lateral approach while leveraging the best possible deals, deepen its engagement with Asian Quad powers and build its capacities as in MICs and a Blue Navy based on a strategic partnership with the US to be able to deter and counter CPT Axis.

The great power competition between the US led alliance of democracies and China led Axis Bloc (CPT+DPRK) will have huge ramification on various regions globally from the Middle East, Central Asia to Africa. In the Middle East, the scrapping of Iranian Nuclear Deal and breaking away of Turkey from NATO would solidify the China-Pakistan-Turkey Axis with Iran being boxed in this axis albeit temporarily. These changing dynamics in Cold War 2.0 would further accentuate the Shia-Sunni conflict in the region which has begun with America propping Israeli-Saudi Axis to whittle down the Shia Crescent as Iran looks towards Russia and China with regards to Oil imports and its infrastructure.

In Central Asia, US strategies to counter China and its OBOR could range from dealing with Taliban in Afghanistan to backing a host of secessionist movements in the region aimed at China’s Xingjiang to even propping up Russia vs. China proxy fight for dominance in the region that was once Russia’s backyard. While the rivalry in the Middle East and Central Asia would be fought by proxies, the fight for dominance in Africa will be more direct as US military dominance in its shadow war in Africa competes with China’s infra-military expansion to expropriate its rich natural resources. Africa being the grain bowl with abundant natural resources is critical to feeding the burgeoning global population which makes it critical in the great power competition between the US and China.

With the escalating Trade War between the US and China and the Chinese backing of powers like Turkey, Pakistan and North Korea, glimpses of Cold War 2.0 are becoming visible. The Chinese have effectively managed to get North Korea to back off from any sincere commitment on Denuclearisation as a leveraging tool against Trump’s trade tariffs targeting the Chinese economy and its high tech sector. China’s debt trap diplomacy in OBOR is many times bigger than US’s Marshall plan thus making countries like India, Japan and Australia agree on US rules based order in order to counter the rising Chinese influence in Indo-Pacific region. The recent launch of Petro Yuan, expanding Chinese influence in Latin America and Africa and the defiance of US Sanctions on Iran only confirms that China is upgrading its profile to become the disruptor in chief of the global order with a view to upend it and replace it with the Chinese Order.

As China rises to stake its claim with the CPT axis and other allies like DPRK, Iran; it will force other democratic countries in the region to rally around the Quad powers of US-India-Japan-Australia in Indo-Pacific with Russia playing a pivotal role in tilting the balance at a critical juncture when it would matter the most. The world is poised to witness new Cold War 2.0 which will not only entail military conflict but also upend the geopolitical and geo-economic order as written about 2 years back in 2016. Welcome to The New Global Order. The show has just begun!

Notes:

Henry Kissinger: ‘We are in a very, very grave period’ https://www.ft.com/content/926a66b0-8b49-11e8-bf9e-8771d5404543

America First: Impact of American Foreign Policy on the Global Order https://www.asianwarrior.com/2017/02/america-first-impact-of-american-foreign-policy-on-the-global-order.html

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